Idea to buy Esperion pre-dated Pfizer announcement

The celebrated Ann Arbor entrepreneur - a renowned scientist who co-discovered the world's best selling drug, Lipitor - just bought back the biotech company he sold to Pfizer almost five years ago.

Newton raised $22.75 million from four venture capital firms to re-acquire Esperion Therapeutics, which went defunct after Pfizer announced Jan. 22, 2007 that it would close its Ann Arbor and Plymouth Township operations.

The buy-back signals the end of a journey to hold onto Esperion that, Newton told Ann Arbor Business Review, began months before the public learned that Pfizer planned to leave Ann Arbor.

Newton said John LaMattina, then president of Pfizer Global Research & Development, had already tipped him off to the possibility Esperion would be shuttered.

So when the announcement was made, he immediately got in touch with his Pfizer contacts and started a discussion process that took 15 months and culminated with the announcement May 1 that the deal had been sealed.

The company, which Newton had sold to Pfizer for $1.3 billion in early 2004, will keep the name Esperion Therapeutics Inc. Newton may also acquire Esperion's former building in Plymouth Township, though he said he's also considering locations in Ann Arbor.

Esperion is expected to pursue drugs that would fight cardiosvascular and metabolic disease.

Newton hopes Esperion can accomplish what Pfizer couldn't with torcetrapib, the now-infamous drug candidate that promised to raise the "good" HDL cholesterol. That compound was abandoned in late 2006 after clinical trials showed that it had a potentially deadly impact on humans.

Developing a compound that can safely and efficiently raise HDL cholesterol is a challenge no researcher has met.

Newton thinks he can build a team of scientists - which will grow to about 10 within weeks, he said - to confront that challenge.

But he refused to make a prediction about when the company would be ready for clinical trials, saying the process is "more complicated" than lowering LDL cholesterol - which Lipitor does.

"It takes time to get all the kinks out of it and to be able to prove that you can do what you think you can do, and then move on and take it to show the benefit in humans," Newton said.

Jan Garfinkle, founder and managing director of Arboretum Ventures, said Newton's leadership qualities and successful track record made her fund's investment an easy choice.

"We are involved because of Roger Newton," she said. "Roger is truly one of the visionaries on finding new drugs to help with cardiovascular disease."

Building Esperion again

Newton faces a rare challenge: how to build a company that he already built.

Newton, who is active in the local life sciences community but rarely gives interviews, spoke at a small workshop at the MichBio annual meeting in April, where he detailed how he built Esperion from startup to exit in less than six years.

When Pfizer initially acquired Esperion, the pharmaceutical giant wanted to integrate the company and its technology into its existing infrastructure. But Newton lobbied intensely for Pfizer to continue operating Esperion as a semi-independent operation - which is what ultimately happened.

"They said they wanted to transition us into Pfizer. I said, 'What the hell does that mean?'" he said.

He said the billion-dollar investment Pfizer made would look foolish if the company integrated Esperion's technology and employees into its system. He predicted the employees would have left if Pfizer had stuck with its initial plan.

"(They're) equally important, if not more important, than the technology. The people are what made Esperion successful," he said at the workshop.

Newton said later that Pfizer generally was a good corporate parent. He said he yearned for more freedom, but declined to be overly critical, saying it would be "frustrating retrospective analysis."

"We had all kinds of freedoms to pursue drug discovery efforts, but we didn't have the freedom to develop in the way that we thought would be best to develop some compounds in the clinic," he said.

"I don't have much to complain about," he said. "Certain things could've have been different, but that's hindsight and I'm not going to Monday-morning quarterback what should have been."

Attracting capital

As an entrepreneurial leader, Newton built a reputation for successfully raising capital and building value in a company. The first time around, he raised some $200 million in capital for Esperion, including $126 million through a pair of IPOs.

Esperion had grown to about 79 employees when Pfizer announced in December 2003 that it would acquire the firm. It had about 60 when the doors closed in summer 2007.

Whether Newton can turn the company into an acquisition target for the second time is contingent upon its ability to show positive results in clinical data.

Garfinkle said the trend in the pharmaceutical industry toward relying on smaller life sciences firms to take risks in the R&D process could benefit Esperion.

"A lot of them are looking toward the smaller, more nimble biotech companies to provide a pipeline for them," she said. "They just don't look at drug development nearly the same way that they used to and they really rely on the startup world to provide the new products for them."

Asked whether it has been suggested that he could become one of the few entrepreneurs to sell the same company twice, Newton didn't want to speculate. He said it was the first time he had thought about it.

"That wasn't my plan the first time and it's not my plan the second time," he said. "I don't have any preconceived notions, nor do I get caught up in predicting what's going to happen down the road."